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4 big analyst cuts: Peloton earns another downgrade after disappointing earnings.

Davit Kirakosyan |

© Reuters

Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Peloton Interactive, Texas Instruments, Ambarella, and Centene.

Peloton earns another downgrade after disappointing Q4

Peloton Interactive (NASDAQ:PTON) shares fell more than 2% pre-market today after Macquarie downgraded the company to Neutral from Outperform and cut its price target to $7.00 from $10.00, as reported in real-time on InvestingPro.

Shares fell around 13% since last week’s Q4 earnings announcement, highlighted by an EPS miss and worse-than-expected revenue guidance for Q1/24. Furthermore, the company said it does not currently expect to remain free cash flow positive in its two upcoming quarters, citing the impact of the seasonality of its hardware sales, the timing of inventory payments, and marketing expenditures.

Last week, the company received downgrades from BofA Securities and Needham after a disappointing quarterly report.

Texas Instruments falls on Bernstein downgrade

Texas Instruments (NASDAQ:TXN) shares fell more than 2% pre-market today after Bernstein downgraded the company to Underperform from Market Perform with a price target of $145.00.

We have the utmost respect for Texas Instruments, who has been vocal, and 100% transparent, about their capex and inventory plans going forward as they structurally raise spending to build out capacity to support revenue growth over the next 10-15 years, However, Street models still do not appear to contemplate the consequences of TXN's plans, and gross margin expectations appear far too high to us.

Bernstein anticipates a decline in gross margins to around 60% or even lower, significantly below the current estimates. The firm also pointed out Q4 revenue estimates as overly optimistic, leading to potential risks beyond just gross margin trajectory.

This, combined with an already high valuation and a significant gap between earnings and free cash flow, leads the firm to believe that Texas Instruments is positioned for structural underperformance as its longer-term strategy rolls out.

Two more downgrades

TD Cowen downgraded Ambarella (NASDAQ:AMBA) to Market Perform from Outperform and cut its price target to $65.00 from $90.00.

Shares plunged more than 20% pre-market today after the company provided its Q3 guidance that significantly missed consensus estimates.

Morgan Stanley downgraded Centene (NYSE:CNC) to Equalweight from Overweight and cut its price target to $73.00 from $94.00. Shares fell more than 1% pre-market today.


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